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Iceland Rejects Icesave Debt Deal - (online.wsj.com) Icelandic voters appeared Sunday to have rejected a government-approved deal to repay Britain and the Netherlands $5 billion for their citizens' deposits in the failed online bank Icesave. Partial results of a national referendum suggested the "no" side had gained more than half the votes -- a reflection of enduring anger over the economic havoc wrought by Iceland's risk-taking bankers. Full results were not due until later Sunday. With partial results in from all six of Iceland's constituencies, the no side had almost 57 percent of the votes and the yes camp just over 43 percent. "This is of course a disappointing result," said Prime Minister Johanna Sigurdardottir. Icelanders overwhelmingly rejected a previous deal in a referendum last year. The government hoped a "yes" vote on an improved offer passed by parliament would finally resolve a dispute that has caused friction among the three countries and complicated Iceland's recovery from its economic collapse in 2008. The dispute has grown acrimonious, with Britain and The Netherlands threatening to block Iceland's bid to join the European Union unless it is resolved. "Taxpayers should not be responsible for paying the debts of a private institution," said Sigriur Andersen, a spokeswoman for the Advice group, which opposes the agreement. "I think that sends the wrong message onto the market, and sets a wrong precedent." Icelandic voters want no part of "Icesave". Even the name "IceSave" is preposterous. Iceland was save by the fact voters rejected "Icesave". Icelanders would have been debt-slaves for decades had they accepted the original terms.
A debt disaster behind a comic book budget squabble - (www.ft.com) The world had better start paying attention to the US government’s inability to govern. The prevailing mood over this has been strangely complacent. Six months of the fiscal year gone and only now a ramshackle budget? Government brought to the brink of shutdown over trifling disagreements? Absurd, one thinks, but this is Washington. Do as most Americans do, and regard the pantomime with blithe contempt. In the end, out of sheer exhaustion, the actors do their deals and it is business as usual. So it proved with the shutdown farce. Capitol Hill and its followers tracked the quarrel avidly. TV news showed clocks counting down the hours and minutes before “inessential services” would be suspended. Talks between Congress and the White House were covered as though a nuclear strike was imminent. With an hour to go, a deal that no one understood was done. The president stood before the cameras: “Americans of different beliefs came together again,” he said, as if expecting applause. Some laughed; most yawned.
Obama’s new approach to deficit reduction to include spending on entitlements - (www.washingtonpost.com) President Obama this week will lay out a new approach to reducing the nation’s soaring debt, proposing reductions in spending on entitlements such as Medicare and Medicaid and renewing his call for tax increases on the rich. In an effort to go on the offensive in the battle over government spending, Obama will look for cuts in “all corners of government,” senior adviser David Plouffe said on several Sunday talk shows. Although Obama’s health-care law is projected to curtail Medicare spending over time, “we have to do more,” Plouffe said Sunday, marking the first time the administration has made an explicit commitment to changes in entitlement programs for the purpose of deficit reduction. Contrasting the president’s approach with what Republican leaders have put forward, Plouffe said Obama will use a “scalpel” and not a “machete” as he seeks to preserve funding for education and other areas he considers crucial to the country’s long-term economic success.
Germany Warns on Greek Debt, Defying Efforts to Snuff Out Crisis - (www.bloomberg.com) Germany warned that deficit-scarred Greece might need more financial relief, reviving European debt concerns just as Portugal seeks an 80 billion-euro ($116 billion) aid package. German Finance Minister Wolfgang Schaeuble said it is unclear whether Greece, the root of the year-old debt crisis, will need another cut in its bailout rate or a further extension of repayment terms to return to fiscal health. “We, also the Greek government and the Greek colleague, can’t say for good today whether that’s enough,” Schaeuble told reporters after an April 9 meeting of European finance officials in Godollo, Hungary. “Whether that is enough and how this continues will have to be monitored closely.” Germany’s doubts conflicted with official assertions that Greece is on the right track, defying efforts to put an end to the crisis that threatened the survival of the euro, postwar Europe’s signature economic achievement. Last week’s increase in European Central Bank interest rates for the first time in almost three years throws a further cloud over weaker economies.
Former PBOC Adviser: US Treasury Bond Market Bolstered By 'Ponzi Scheme' - (online.wsj.com) A prominent Chinese economist and former adviser to the country's central bank Monday likened the market for U.S. Treasury bonds to a giant ponzi scheme, and argued China should float the yuan in part so it doesn't have to acquire so many Treasury assets. "China should have retreated from the U.S. government bond market a long time ago," Yu Yongding, currently an economist at a state think tank and formerly a member of the People's Bank of China monetary policy committee, wrote in an essay on the Caixin Media Group website. "The (U.S government) bond market was essentially bolstered by a ponzi scheme. The U.S. Federal Reserve's policy of quantitative easing has artificially kept the bonds at a high price. However, the market price of the bonds will eventually fall to a level determined by the fundamentals of the U.S economy," Yu added. China should allow a free floating yuan, he argued, intervening in the foreign exchange market only when necessary, as this would reduce the need to acquire U.S. dollar assets. An appreciation of the yuan would also help control money supply growth and inflation, he added. Yu has no official sway over policy, and his views could hardly be considered the consensus among policymakers. But his sharply worded essay is a window into the contentious debate, taking place largely behind closed doors, between various top officials and scholars in China on the country's exchange rate and foreign investment policies.
OTHER STORIES:
Yellen Says Commodity-Price Rise Doesn’t Warrant Policy Shift - (www.bloomberg.com)
Obama’s deficit-reduction plan to include cuts to Medicare-Medicaid, tax increases for wealthy - (www.washingtonpost.com)
IMF Cuts 2011 U.S. Growth Forecast on Oil, ‘Lackluster’ Pace of Job Gains - (www.bloomberg.com)
Japan May Raise Nuclear Accident Rating as Radiation Increases - (www.bloomberg.com)
Soros Warns Moral Hazard ‘Looms Larger’ as Volcker Says Big Banks Can Fail - (www.bloomberg.com)
Best Currency Forecasters See Dollar Weakness as QE2 End Looms - (www.bloomberg.com)
Stiglitz Calls for New Global Reserve Currency to Prevent Trade Imbalances - (www.bloomberg.com)
China Meat Binge Fuels Iowa-Sized Soybean Imports to Feed 689 Million Pigs - (www.bloomberg.com)
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